In the new issue of Regulation, economist Pierre Lemieux argues that the recent oil price decline is at least partly the result of increased supply from the extraction of shale oil. The increased supply allows the economy to produce more goods, which benefits some people, if not all of them. Thus, contrary to some commentary in the press, cheaper oil prices cannot harm the economy as a whole.

Two long wars, chronic deficits, the financial crisis, the costly drug war, the growth of executive power under Presidents Bush and Obama, and the revelations about NSA abuses, have given rise to a growing libertarian movement in our country – with a greater focus on individual liberty and less government power. David Boaz’s newly released The Libertarian Mind is a comprehensive guide to the history, philosophy, and growth of the libertarian movement, with incisive analyses of today’s most pressing issues and policies.

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Tag: national interest

In his speech last night defending U.S. participation in Libya’s civil war, President Obama repeated the justifications for bombing Libya that I attacked in a post written for the National Interest last Friday, “Three Phony Reasons to Bomb Libya.”

1. The President argued that Qaddafi recently “lost the confidence of his people and the legitimacy to lead.” I’ll again quote George Will on that:

Such meretricious boilerplate seems designed to anesthetize thought. When did Gaddafi lose his people’s confidence? When did he have legitimacy? American doctrine — check the Declaration of Independence — is that governments derive their just powers from the consent of the governed. So there are always many illegitimate governments. When is it America’s duty to scrub away these blemishes on the planet? Is there a limiting principle of humanitarian interventionism? If so, would Obama take a stab at stating it?

2. Obama said in his speech that humanitarian concerns caused U.S. military action. Here’s what I wrote about that:

Certainly humanitarian concerns influenced some Libya hawks, including the President and his advisors. But that rationale is more selling point than motivation. Libya’s is a not particularly brutal civil war compared to others we ignore.

Nor is it clear that bombing Libya serves humanitarian ends. True, absent outside intervention, the Libyan government would likely have reasserted its authority in the east, killing rebellious civilians. But the civil war that intervention prolonged will probably kill more. In his March 18 speech justifying war on humanitarian grounds, Obama quoted Qaddafi’s promise to show “no mercy and no pity,” but failed to note that the dictator was threatening rebel fighters, not civilians, and explicitly excluded rebels that surrendered. The point is not that we should bank on such promises but that the path to minimizing violence is uncertain.

3. The President claimed that if Qaddafi defeated the insurgency:

The democratic impulses that are dawning across the region would be eclipsed by the darkest form of dictatorship, as repressive leaders concluded that violence is the best strategy to cling to power. The writ of the UN Security Council would have been shown to be little more than empty words, crippling its future credibility to uphold global peace and security.

I summarized my argument for why this is a terrible reason for war this way:

Credibility rationales for wars suffer two crippling deficiencies. First, there is little evidence credibility travels much. Second, even if it did, fighting limited wars of questionable value seems likely to damage one’s perceived willingness to fight elsewhere. Western intervention in Libya may encourage Middle-Eastern dictators to crush dissenters rather than accommodate them.

Three other arguments that the President made last night need response.

4. He again claimed that while U.S. policy aims to replace Qaddafi with democracy, our military efforts serve only to defend civilians. That’s a useful fiction meant to keep the coalition unified and mitigate worries about mission creep. We are now giving the rebels close-air support (though our military spokespeople aren’t allowed to say so) and attacking the Libyan military even where it does not threaten civilians. As I’vesaid, although I oppose fighting in this war, insofar as we are in, we should have a military policy consistent with our goal of helping the rebels win. So this is good mission creep. But even with stepped-up air support, the rebels likely still lack the organization to overtake western cities, meaning that stalemate and de facto partition remain likely.

5. As if to undermine that last claim, the President used the word freedom a half dozen times in his speech, concluding with soaring rhetoric about how promoting freedom is good for Americans. The trouble with this argument is that, as Stephen Walt argues, research on the history of interventions meant to overthrow leaders of weak states shows that the “probability that our intervention will yield a stable democracy is low, and that our decision to intervene has increased the likelihood of civil war.”

6. To convince us that this war is not rash / Bush-like, the President argued that he went to war with the support of the U.N. Security Council, European allies, the Arab League, and the Libyan opposition. Left off the list of consenters are Americans and their congressional representatives. Maybe the President now agrees with Jack Goldsmith that candidate Obama’s 2007 opposition to bombings undertaken without congressional authorization is constitutional formalism rendered moot by decades of congressional supplication before presidents. Maybe he agrees with Hillary Clinton’s contention that the United Nation’s Security Council can legalize what Congress does not or Congressman Jim Moran’s notion that it shouldn’t vote on wars because it is “too easily influenced by public opinion.”

The whole point of separating powers, of course, is to check executive whimsy with congressional power that reflects public opinion. That fact that Congress has authorized plenty of dumb wars shows that the check is insufficient, not that it is useless. It is probably naive to think that Congress would have blocked this war, but by exercising its atrophied war powers Congress at least might have caused the war to be waged with more wisdom and forethought.

Tonight, to sell the illusion of America’s “limited military action” in Libya’s civil war, President Barack Obama insisted that America had a moral imperative to intervene militarily, implying he will do so wherever foreign leaders commit atrocities against their people. This latest mission in the name of “humanitarian imperialism” is extremely dangerous. In fact, if all goes well in Libya, it might be just as bad as if we fail.

Consider, for instance, if I walked through a wall of fire and came out the other side unharmed. Although I came out safe and sound, my decision to walk through the wall of fire was still misinformed. My good outcome was simply one among a host of potentially terrible outcomes. After all, if I were to walk through that wall of fire again and again, given the danger and level of risk, I would end up with many more bad outcomes than good outcomes.

In this respect, and in terms of our external security commitment to Libya, what matters is not necessarily a good outcome, but making a good decision in the face of various options. Thus, even a narrow and limited military engagement does not mean an absence of risk; one need only reference our “narrow and limited” military engagement in Vietnam to understand the danger of foreign gambles. If indeed our military can be ordered by the president to any corner of the globe, for the advance of human rights and in the absence of vital American interests, then the repercussions of our latest intervention could reverberate well beyond Libya.

President Obama’s decision to launch a series of military strikes against Libya raises a host of questions, many more than can be answered in his much-belated address to the American people tonight. At a minimum, the President must clarify the purpose and scope of the mission. He has declared that the sole object is to protect civilians from harm. Others in his administration, however, suggest that military operations will continue until Muammar Qaddafi leaves office.

In fact, the two goals might be contradictory, as the need to protect civilians from violence could well extend long after Qaddafi’s regime is toppled. If the rebels seize power and then turn their guns on former regime supporters, the U.S. military may find itself in the middle of a bloody civil war, as it did in Iraq. President Obama must provide assurances to the American people that he has not committed American blood, treasure, and prestige to a mission that does nothing to preserve U.S. national security, and might ultimately harm it.

Even if the President can clarify the mission, articulate an exit strategy, and give ironclad assurances that the U.S. military is not involved in yet another open-ended nation-building mission, the President’s speech this evening cannot explain away his blatant abuse of executive power. In 2007, Senator Obama declared “The President does not have power under the Constitution to unilaterally authorize a military attack in a situation that does not involve stopping an actual or imminent threat to the nation.” And yet no one has claimed that Qaddafi’s threats against the Libyan rebels posed a threat to the United States. Nor can anyone show that Qaddafi’s ouster would advance U.S. security. If the rebels prove more tolerant of al Qaeda or other violent extremists, the net effect of this intervention might be to increase the threat of attack against the United States.

Obama’s instincts in 2007 were correct. His ascendancy to the presidency appears to have prompted a change of heart, but no one should be encouraged by this Oval Office conversion. That his predecessors have similarly abused their power is no excuse. The United States is governed by laws, not by men. To allow a single person to wage war without the expressed consent of the people, as stipulated by the Constitution, merely compounds the serious harm done to our institutions of government over the past several decades.

The calls for cutting the federal budget continue to build in Congress as the new GOP members try to make good on their promise to rein in the deficit. And, right on time, the latest issue of the Weekly Standard features an article by Robert Kagan critiquing the chorusofcalls for cuts to military spending.

I think Kagan’s critique is reasonably fair, certainly more so than others of the recent past. But his basic premise, that national security spending is unrelated to the national debt, simply is not true. At the The Skeptics, I address this:

It is of course true that entitlements and mandatory spending pose the greatest threat to the nation’s fiscal health, but $700+ billion [in defense spending] isn’t chump change. The question of what we should spend on the military ought to take into account the trade-offs, an argument that Dwight Eisenhower advanced in his farewell address just over 50 years ago, and that Charles Zakaib and I highlighted last week. (See also James Ledbetter’s discussion on this point.)

…

Actually, it is a question of fairness, but not the one that [Kagan] proposed. Because security is a core function of government (I think one of the only core functions of government), it would be a mistake to treat military spending as synonymous with spending on, say, farm subsidies. But Kagan’s writings presume that other countries’ governments do not – and should not – see their responsibilities in the same way. Kagan contends that American taxpayers should be responsible for the security of people living in Europe or East Asia or the Middle East. Or anywhere in the world, really… It simply isn’t fair to ask Americans to pay for something that other people should pay for themselves. For reference, the average American—every man, woman and child—spends two and a half times more on national security than the French or the British, five times more than citizens living in other NATO countries, and seven and a half times as much as the average Japanese.

Justin Logan is in the process of authoring a lengthier response for publication, but in the mean time click here to read the full post at TheNational Interest.

“If we do nothing, I can guarantee you that within a decade, a communist Chinese regime that hates democracy and sees America as its primary enemy will dominate the tiny country of Panama, and thus dominate the Panama Canal, one of the world’s most important strategic points.”

Rohrabacher made this alarming prediction during a debate on the U.S. handover of the Panama Canal. His fellow hawk, retired Adm. Thomas Moorer, even warned that China could sneak missiles into Panama and use the country as a staging ground for an attack on the United States. Well, Rohrabacher’s decade ran out this December, and all remains quiet on the Panamanian front. As for China, the United States is now its largest trading partner.

Flowers and Chocolates?

The point here isn’t to poke fun at Rohrabacher, or any of the other predictors featured on the FP list. Rather, it’s to point out that predicting the future is really hard. And as Ben Friedman and I have harped on, you just can’t aspire to any predictive competence without sound theory to guide you. In order to judge that if we do (or don’t do) X, Y will happen, you need a theory connecting X to Y. So looking back at our predictions, and comparing them to the results of our policies, is a useful way to test the theories on which we based our policies in the first place.

Putting falsifiable predictions out there is a collective action problem, though: If I start offering nothing but precise point-predictions about what will or won’t happen if we start a war with Iran, or how big the defense budget will get, or anything else, I’m going to get a lot of things wrong. And if everyone else keeps offering vapid, non-falsifiable rhetoric, I stand to look like a real jackass while everyone can hide behind the fog of common-use language. As I wrote in the National Interest a while back:

Foreign-policy analysts have an incredibly difficult task: to make predictions about the future based on particular policy choices in Washington. These difficulties extend into the world of intelligence, as well. The CIA issues reports with impossibly ambitious titles like “Mapping the Global Future”, as if anyone could actually do that. The father of American strategic analysis, Sherman Kent, grappled with these difficulties in his days at OSS and CIA. When Kent finally grew tired of the vapid language used for making predictions, such as “good chance of”, “real likelihood that” and the like, he ordered his analysts to start putting odds on their assessments. When a colleague complained that Kent was “turning us into the biggest bookie shop in town”, Kent replied that he’d “rather be a bookie than a [expletive] poet.”

In 1992, the Los Angeles Times ran an article outlining the dynamics of the “predictions” segment of the popular “McLaughlin Group” TV program. Michael Kinsley, who had been a panelist on the program, admitted

“When I was doing the show, I was much more interested in coming up with an interesting prediction than in coming up with one that was true. There’s no penalty for being wrong, but there is a penalty for being boring. …Prognosticators have known for centuries that people only remember what you got right. They don’t remember what you got wrong.”

Foreign-policy analysis works in much the same way. Errant predictions are quickly forgotten. It is the interesting predictions that the media want, and unfortunately interesting predictions in the context of foreign policy often mean predictions of unprovoked foreign attacks, geopolitical chaos, and a long queue of bogeymen waiting to threaten us. (By contrast, after a given policy is enacted, its proponents have to spin it in a positive light, as in Iraq.) Meanwhile, it is the person with the quickest wit and the pithiest one-liner–not the deepest understanding–who winds up with the responsibility of informing the American electorate about foreign-policy decisions.

So it’s very good to see that Foreign Policy has interest in holding everyone’s feet to the fire. John Mueller does a similar service in The Atomic Obsession, pointing out the many predictions of doom, apocalypse and general disaster that have characterized both the hawkish establishment and the leftish arms-control clique.

If this sort of exercise becomes common, though, watch for foreign-policy commentators not to develop a growing sense of modesty about their predictive power, but rather to take greater care in avoiding falsifiable statements altogether.

For hundreds of years, trade policy has been premised on the assumptions that exports are good, imports are bad, and the interests of domestic producers are tantamount to the “national interest.” Though that mercantilist worldview has never been accurate, its persistence as a pillar of trade policy into the 21st century is especially confounding given the emergence and proliferation of disaggregated production processes, transnational supply chains, and cross-border investment. Those trends have blurred any meaningful distinctions between “our” producers and “their” producers and speak to a long chain of interdependent economic interests between product conception and consumption.

Still, trade policy places the interests of domestic producers above all else even though the definition of a domestic producer is elusive and even though actions on behalf of producers often harm interests along the product continuum, which include engineers, designers, financiers, processors, assemblers, marketers, shippers, retailers, consumers, and others.

In 2008, foreign nameplate automobile producers, employing American workers, paying American taxes, and supporting American businesses, communities, and charities, accounted for almost half of all U.S. light vehicle production. The largest “U.S.” steel producer, Arcelor-Mittal, is a majority-Indian-owned company with headquarters in Luxembourg and Hong Kong. The largest “German” producer, Thyssen-Krupp, is completing a $3.7 billion green-field investment in steel production facilities in Alabama, which will create an estimated 2,700 jobs in that state.

So, who are “we”? And who are “they”?

Are these foreign-named or –headquartered companies not “our” producers because some of the profits they earn are repatriated or invested in operations outside the United States? If so, then shouldn’t we consider U.S. Steel Corporation, which earned 25 percent of its revenue last year on steel produced in Slovakia and Serbia, and General Motors, which has had success producing and selling cars in China, to be “their” producers? Why should U.S. Steel, General Motors, and the unions that organize workers at those companies dictate the parameters of U.S. trade policy, while Toyota, Thyssen and their non-union workers have no input? Why should trade policy reflect a bias in favor of producers—or worse, particular producers—at all? That bias hurts other interests—both foreign-based and domestic—in the supply chain.

Global commerce isn’t a competition between “us” and “them.” It is instead a competition between entities that defy national identification because of cross-border investment or because the final good or service comprises value added from many different countries. This reality demands openness in both directions, which flies in the face of conventional trade policy wisdom, which seeks to maximize access for domestic producers abroad while minimizing access for foreign producers at home.

It is only for simplicity’s sake that a container full of iPods shipped from China and unloaded in Seattle registers as imports from China. But the fact is that only a few dollars of the $150 cost to produce an iPod is Chinese value-added. The rest is mostly value attributable to Japanese, Korean, Singaporean, Taiwanese, and American components and labor. Then iPods retail for about $300 and most of the mark-up accrues to Apple, which uses the profits to support innovation and higher paying jobs in the United States.

From a trade policy perspective, each iPod imported from China adds $150 to our bilateral deficit in “high tech” goods. It is regarded as a problem to solve. The temptation is to restrict.

But from a commercial perspective, each imported iPod supports U.S. economic activity up the value chain. Without access to lower-cost labor abroad—if rudimentary component manufacturing and assembly operations were required to take place in the United States—ideas hatched in American labs would be far less likely to make it beyond the white board. Much higher costs would make it far more difficult to create these ubiquitous devices that have, in turn, spawned new ideas and industries.

Essentially, the factory floor has broken through its walls and today spans borders and oceans, making Chinese and American labor complementary in this and many other industries. Yet, despite all of this integration, despite the reliance of producers in the United States and abroad on imported raw materials, components, and capital equipment, trade policy still pretends that access to the domestic market is a favor to grant or a privilege to revoke. Trade policy is officially ignorant of commercial reality.

Openness to trade in both directions is an imperative in the 21st century. Policies that do not try to channel incentives for the benefit of specific groups but rather provide the greatest opportunities for citizens to participate most effectively in our increasingly integrated global economy are the ones that will maximize economic growth and national welfare. People in other countries should be thought of more as customers, suppliers, and potential collaborators instead of competitive threats.

In the 21st century, instead of serving the exclusive interests of domestic producers, trade policy should be about welcoming investment and attracting and cultivating the human capital necessary to make the United States the location of choice for the world’s highest value economic activities.

USA Today reports that retired military officers join the boards of directors of, or become employees of, defense contractors and take home big bags of money doing so. Not surprising. At the same time, the paper reports, lots of them are being paid by the Pentagon to be “senior mentors” of their former colleagues. Not being government employees, but rather independent contractors, these folks aren’t subject to government ethics rules. To take one example, as chairman of BAE Systems, Gen. Anthony Zinni is clearing almost a million a year, in addition to his $129,000 per year government pension. In addition to all that, the Pentagon pays him about $2,000 per day to “mentor” people at DOD.

As the article points out, information is almost invaluable to the defense contractors in these contexts. The knowledge of what’s going on at DOD is extremely useful for planners at the defense companies, and so while the retired officers are protesting that being paid nearly $2,000 per day by DOD for their work as mentors is “way below the industry average,” it increases their value to, and presumably their compensation from, their military-industrial employers. As one coordinator of the mentors program told the retired officers, “you’re getting paid in two ways–monetarily and informationally.”

McCain’s thoughts about conflict of interest in that instance? He was “so proud” of his lobbyist-cum-adviser. Presumably once McCain issued his ridiculous “today we are all Georgians” fatwa it became a patriotic duty to take money from foreign governments to represent their interests. But in the case of the proposed reforms–which would attempt to institute some semblance of transparency in these mentoring deals–one can only wish the senator from Arizona the best.